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00:00KRITI: GOOD MORNING FROM LONDON, I'M KRITI GUPTA. MARIO DRAGHI SAYS THE EU CAN NO LONGER RELY ON IT'S ECONOMY FOR INFLUENCE IN THE WORLD. TOM: US FUTURES ARE FLAT. UPSIDE OFOR THE S & P, RUSSEL 2000 SOARS ON THE PIVOT FROM POWELL. LINE CALL: FAULT. -- FUTURES ARE SOFTER WITH QUESTIONS ABOUT BUBBLE TERRITORY. THE THE BEING HANDED IT OVER. A RALLY WITH YIELDS AT 371. THE COUNTDOWN TO THE OPENING TRADE STARTS RIGHT NOW. ♪ KRITI: GOOD MONDAY MORNING, LOTS GOING ON ON THE GEOPOLITICAL FRONT AND THE POLICY FRONT, EXCEPT EUROPEAN MARKETS ARE OPEN. OVER THE WEEKEND WE LEARNED FROM THE JACKSON HOLE POLICY MEETING THAT CUT IS ON THE TABLE, POWELL IS CONFIRMING THAT. TOM: FED OFFICIALS WERE NOT COMMITTING TO SEPTEMBER AND THEN JAY POWELL OPENS THE DOOR FOR THE CUT, DOES NOT UNDERMINE MARKET PRICING. FIRST CUT OF THIS YEAR FOR THE FED EVEN WITH INFLATION DATA ABOVE TARGET. LOOKING AT A RECONSTITUTION ON CONCERNS THAT HE WILL BE OUTVOTED FOR IS HE CONCERNED WITH GETTING AHEAD OF THE STORY? KRITI: THERE IS A POSSIBILITY THAT THE TARIFF READTHROUGH IS A ONE-TIME HIT, CODE FOR TRANSITORY FROM -- FROM -- FROM HIS PRIOR -- PRIOR DAYS, DAN CURTIS POINTED OUT IN A CHART THAT THIS IS ONE OF THE LONGEST TIMES THE FED HAS PAUSED IN AN EASING CYCLE AND WE DO NOT HAVE A ROADMAP FOR HOW THE MARKET SHOULD BE PRICING. 10 YEAR IS AT 426, SO WE HAVE NOT SEEN TREASURIES BREAK OUT OF ITS RANGE. TOM: LOOK BACK TO 2024 TO SEE CUTTING WITH THE YIELDS GRINDING HIGHER. ON THE LABOR MARKET, CURIOUS, A CURIOUS LABOR MARKET AS JAY POWELL POINTED TO A DROP-OFF IN DEMAND FOR WORKERS AND IN THE DECLINE IN SUPPLY WITH IMMIGRATION MUDDYING THE WATER ON THE JOBS MARKET. KRITI: THAT WAS THE U.S. TAKE. WE GOT COMMENTARY FROM OTHER GLOBAL BANKERS LIKE CHRISTINE THE GUARD IN ATTENTION -- OR IN ATTENDANCE. COMMENTARY FROM OUTSIDE THE U.S. UNDERSCORED THEIR OWN -- OWN CENTRAL BANK DECISIONS. ANOTHER STORY, MARIO DRUGGIE MAKING HEADLINES, SAYING THE EU IS NOT WHERE IT USED TO BE AND UNDERMINING FOREIGN POLICY AND ECONOMICS, THEY STARTED TO CLASH IN THE STATES AS TRUMP PASSES ON HIS TRADE AGENDA. HE USES ECONOMICS AS A WEAPON OR AS A TOOL. YOU CAN SEE IT IN THE LIKES OF RUSSIA, ISRAEL AND OTHER PARTS OF THE WORLD. THE EU IS NOT ABLE TO YIELDS THE INFLUENCE THAT IT USED TO. TOM: THE PRESCRIPTION FOR YOUR HE WAS -- FOR EUROPE, HE WAS SAYING HE STRUCK A RAW DEAL WITH THE U.S.. 15% IN EUROPE AND LOWER BARRIERS, TARIFFS AND SHIPMENTS INTO THE U.S. AND ON DEFENSE SPENDING HE SAID THAT WAS UNDER PRESSURE FROM THE U.S., THE DEFENDING -- THE MONEY PUT TO WORK IN DEFENSE MAY NOT BENEFIT EUROPE BECAUSE IT IS UNDER THAT POLITICAL PRESSURE FROM TRUMP. SUGGESTING EUROPE NEEDS TO DO MORE WORK TO ROUND OUT THE EDGES. KRITI: YEAH AND MARIO QUOTED GOLDMAN SACHS THAT 70 OR 80% OF DEFENSE SPENDING GETS LEAKED TO THE U.S. AND THE BULL CASE THAT THE EU DEFENSE RAMP-UP IS COMING, THIS THROWS COLD WATER ON THAT AND TO THE TEXT STORY AS WELL. TOM: TAKING 10% IN INTEL WE HAVE IT CONFIRMED THAT IT IS INTERVENTIONALISTS , TAKING SALES FROM NVIDIA AND AMD INTO THE CHINESE MARKET AND NOW INTEL. FOCUSED ON KEY SECTORS AND NATIONAL SECURITY, WHAT COULD OTHER INDUSTRIES FACE FROM THE U.S. GOVERNMENT AND IS THAT GOOD FOR INVESTORS OR TAXPAYERS? KRITI: THE U.S. GOVERNMENT DOES NOT TAKE STAKES IN COMPANIES UNLESS YOU ARE BAILING THEM OUT AND EVEN THEN IT IS A ONE OFF WITH THE BANKS. A STEAK FOR A COMPANY NOT ON THE VERGE OF BANKRUPTCY IS UNUSUAL. MORE COMMON IN EUROPE BUT NOW YOU HAVE NVIDIA EARNINGS AND POLITICS ARE FRONT AND CENTER WHEN IT COMES TO CHIPS AND THE BOTTOM LINE. TOM: AS THEY DESIGN A NEW CHINESE CHIP, THERE IS A QUESTION OF WHETHER CHINA WILL ALLOW THEIR PEOPLE TO USE THOSE CHIPS. THAT COULD BE THE RISK EVENT WITH THE EARNINGS, EXPECTATIONS ARE STRETCHED. KRITI: WILL THE PARTY STOP ON WEDNESDAY? COMING UP, GEORGE, CHIEF ECONOMIST, JOINS THE PROGRAM AND WE WILL SEE WHAT HE MAKES OUT OF JACKSON HOLE. NICHOLAS, ASSET MANAGER WILL TALK ABOUT THE MARKETS. DO YOU TRADE THESE MARKETS OR BRACE FOR SEASONALITY? THE HEAD OF TRADING AT SEAS GROUP WILL WEIGH IN. TOM: TODAY WE OF COURSE IN A BANK HOLIDAY, SO MARKETS ARE CLOSED AND ENJOY THE HOLIDAY. GERMAN IFO DATA DROPS AND THEN U.S. DURABLE GOODS ON TUESDAY TO GIVE US A SENSE OF DEMAND. CONCERN ABOUT THE TARIFF PARSED THROUGH. NVIDIA EARNINGS DROPPING ON WEDNESDAY AND WE WILL GET A REACTION ON THURSDAY EARLY. ON A DATE OR FRONT -- DATA FRONT, FRIDAY IS THE INFLATION PULSE. IT HAS BEEN GOING UP IN THE U.S., U.S. PCE IS THE FAVORED GAUGE FOR THE FEDERAL RESERVE AND EXPECTED AT 2.8, 2.9%, 2.9% IS THE ESTIMATE, EDGING UP YEAR ON YEAR, 2.9 IS THE EXPECTATION. KRITI: THE PPI DATA IS WHERE TARIFFS SHOW UP AND MARKETS WERE SENSITIVE TO THE PP -- PPI. EVEN IF THE PARTY CONTINUES, DOES IT STOP ON FRIDAY? TOM: THE PARSE -- PASS THROUGH IN TARIFFS WILL HAPPEN. INVENTORIES DRAW DOWN AND COMPANIES WILL PASS COSTS TO CONSUMERS IS THE ARGUMENTS BEING MADE. KRITI: YEAH, TIMING IS IMPORTANT BECAUSE ENERGY PRICES ARE STABLE DESPITE THE GEOPOLITICAL TUGGIN' AROUND THE WORLD. DR. PEPPER WILL ACQUIRE JDE PEET'S AND UNDO THE 2018 DEAL THAT COMBINED KEURIG AND DR. PEPPER. TRUMP HALTS THE WIND FARM OFF RHODE ISLAND BY ORSTEAD. IT HAS STOPPED NEARLY 80% COMPLETION. FRANCE REBUKES CHARLES KUSHNER, THE FATHER OF JARED KUSHNER, WHO ACCUSED FRANCE OF ANTI-SEMITISM. FRANCE SAID THEY FORBID FOREGIN -- FORGEIGN DIPLOMAT'S FROM INTERFERING IN THEIR POLICY. TOM: WIND ENERGY BELOW BLACK -- BLOWBACK, WE CHECK IN THOSE STOCKS. THEN JACKSON HOLE, MORE ANALYSIS. IF YOU HAVE GUESTS QUESTIONS SEND THEM TO US. THIS IS BLOOMBERG. ♪ > > THE STABLE UNEMPLOYMENT ALLOWS US TO PROCEED CAREFULLY. NONETHELESS, THE BASELINE OUTLOOK AND RISK MAY WARRANT ADJUSTING POLICY. KRITI: POWELL SPEAKING ABOUT THE DOVISH PIVOT THE MARKET EXPECTED AND JAMES BULLARD IS A CONTENDER AS FED CHAIR AND SPOKE AFTER JACKSON HOLE. > > HE SOLIDIFIED EXPECTATIONS FOR 25 BASIS POINTS, HE LEANED INTO THE LABOR MARKET'S RECENT, SOFT REPORT, THAT'S A DONE DEAL. HE DIDN'T SAY ABOUT OCTOBER OR DECEMBER. GOING INTO 26, YOU COULD ADJUST AND GET A FULL 100 BP, BUT I WOULD GO SLOWLY. ON THE FRAMEWORK REVIEW, THEY TARGET A FRAMEWORK DISCUSSION AND CHANGES TO THE FRAMEWORK, THSOSE WERE THOUGHTFUL. [SNIFFLING SOUND] > > TOM KEENAN, GOOD MORNING. THIS IS A LENGTHY TERM AT THE ST. LOUIS FED, YOU LIVED THE DECLINE OF A GREAT ECONOMY. IS THE NEXT FED CHAIRMAN MANAGING FOR TWO ECONOMIES? TECH DRIVEN AND ANOTHER AMERICA FLAT ON THEIR BACK? HOW WOULD A CHAIRMAN EXECUTE THOSE TWO AMERICANS? [SNIFFLING] > > IT'S NOT CLEAR HOW MUCH THE FED CAN REALLY DO. IF YOU CHANGE THE RATE STRUCTURE, THAT AFFECTS EVERYONE, SO WE'VE HAD TO DO RESEARCH TO UNDERSTAND BETTER, SO THIS IS AN IMPORTANT THEM GOING FORWARD. TOM: JAMES BULLARD MAKING THE CASE FOR 100 POINTS OF CUTS. PICKING UP THE BATON FROM THE U.S., A STRONG ASIA SESSION, UP OVER 1% AND 1.6%. THE TECH SECTOR IS LEADING GAINS. WE ARE FOCUSED ON SOUTH KOREA'S PRESIDENT VISITING D.C. ON A BIG WEEK WITH ALIBABA AND NVIDIA REPORTING. KRITI: A PARTY ON A CONFIRMATION OF SO MUCH GETTING PRICED IN. GEORGE, THANK YOU FOR JOINING US. GIVE US YOUR TAKE ON JACKSON HOLE AND THE DOVISH PIVOT, HOW ARE YOU READING IT? GEORGE: HIS WORDS WERE CAREFULYL CHOSEN AND MARKETS ARE NOT JUST HEARING 25 BIPS, THEY ARE PRICING IN YIELD CURVE CONTROL AS THE END GAME. YOU MIGHT ALLEVIATE PRESSURE, BUT THE END GAME IS YIELD CURVE CONTROL AND RISK MARKETS PRICE IT IN. KRITI: CONTROL KICKS THE CAN TO SEPTEMBER OR OCTOBER, HOW IMPORTANT IS THAT WITH FED EASING? GEORGE: SO AGAIN, YOU CAN CONTROL THE SHORT END, BUT NOT LONG END UNLESS YOU CREATE MONEY AND BUY BONDS. IS IT IMPORTANT FOR THE DEBT? YES. THERE HAVE BEEN 54 CONVERSATIONS ABOUT THE DEBT CEILING AND WHEN THEY RAISE IT, THE ECONOMY DOESN'T DEFAULT, SO NOT A HUGE ISSUE. THIS WILL CREATE SUGAR RUSH FOR ASSETS, BUT LONGER TERM RISKS WILL BUILD UP AND INVESTORS SHOULD ACKNOWLEDGE THAT. TOM: THOSE RISKS NEED TO BE ACKNOWLEDGED, BUT INTO NEXT YEAR, WHERE WILL THE FED GO AND HOW AGGRESSIVE ARE THEY ON RATE CUTS? > > WE SEE FED INDEPENDENCE SOMEWHAT COMPROMISED AND THAT MEANS IF YOU TAKE THE 70'S AS AN EXAMPLE, PRESSURE ON THE FED TO KEEP COSTS LOW TO HELP GROWTH, SO GOOD FOR SHORT TERM RISK ASSETS. IN 26, I'M POSITIVE RISK ASSETS, BUT LONGER TERM, IT IS NOT GOOD FOR THE DOLLAR AND INVESTORS SHOULD CONSIDER HEDGES. TOM: [CROSS-TALK] WHAT FACTORS ARE YOU LOOKING AT? WHAT ARE SOME HEDGES? > > GOLD IS A GOOD ONE. IF YOU LOOK AT THE NEAR END OF THE CLASSIC DEBT CYCLE, THAT IS THE TIME TO BUILD UP GOLD AND METALS. FOR COMMODITIES LIKE REAL ESTATE, THEY CAN BE IDIOSYNCRATIC, SO YOU NEED TO LOOK AT REAL ASSETS BECAUSE WE ARE TALKING ABOUT THE WEAKER DOLLAR. KRITI: TARIFFS, A KEY LINE FROM POWELL WAS THEY COULD BE A ONE TIME HIT. WHAT RISKS IN TERMS OF THE REAL ECONOMY IF THAT IS WRONG AND TARIFFS' PRESSURES PERSIST WITHOUT THE FED PREPARING. > > I -- YOU HAD AN INTERESTING CONVERSATION WITH JAMES BULLARD. THE FED HAS ONE RATE AND TWO AMERICAS, TECH AMERICA AND EVERYTHING ELSE. THEY HAVE DIFFERENT INFLATIONS. 5-10% AND THE HOUSING MARKET IS DEFLATING, SO HADLINE CPI LOOKS OKAY WITH PRESSURES BUILDING UP, SO A WRONG CALL WOULDN'T BE GREAT BECAUSE THE FED HAS ONE RATE, OKAY? THERE IS ONLY SO MUCH IT CAN DO AND THAT WOULD MATTER IN A LEVERAGED MARKET, BUT THIS IS NOT. THE ONLY OTHER FED TOOL IS MONEY PRINTING, WHICH ACCELERATES INFLATION MORE. TOM: -- OK, YEAH. OK. WE'VE RUN SHORT OF TIME. COMING UP, EU SMALL CAPS AS A RALLY BEGINS, STAY WITH US. THIS IS BLOOMBERG. ♪ KRITI: 30 MINUTES FROM THE OPEN ON A BANK HOLIDAY IN THE UK, BUT EU MARKETS ARE OPEN. THERE IS A RALLY IN ASIA. EUROSTOXX TAKING A BREATHER AND THE DAX IS UNDERPERFORMING. THE BOND MARKET, VERY MUCH A SUMMER MONDAY. YIELDS TICK HIGHER, FOLLOWING THE TREASURY LEAD AND THAT IS CLOSED. TOM: OKAY, LET'S BRING IN SUSAN COLLINS, WHO SAID SEPTEMBER RATES ARE NOT A DONE DEAL. SUSAN: TARIFFS IMPACT IS SIGNIFICANT, NOT JUST ON DIRECT IMPORTS, BUT A RANGE OF GOODS AND SERVICES. IT WOULD SURPRISE PEOPLE HOW MANY USE INTERMEDIATES, SO THE REST OF THIS YEAR AND NEXT YEAR, INFLATION WILL REMAIN ELEVATED. > > WHAT IS THE HARM IN CUTTING BY 25 OR 50 BIPS? WOULD THAT CAUSE INFLATION? > > IT IS ABOUT BALANCE AND THAT'S WHAT I HEAR IN EVERY CONVERSATION ACROSS NEW ENGLAND, IT'S ABOUT RESTORING PRICE STABILITY AND HEALTHY LABOR MARKETS MATTER FOR THE PUBLIC, SO IT'S NOT A DONE DEAL, BUT WE WILL GET MORE DATA. > > EVERYONE OUT THERE, THAT IS GOOD ADVICE -- DON'T BET YET. WILL WE SEE UNEMPLOYMENT RISE OR A LONG TERM RISE IN INFLATION LEADING TO EXPECTATIONS BECOMING UNMOORED? > > THE RISKS ARE IN BALANCE, SO THAT'S COMPLEX, WHEN YOU COULD SEE UNEMPLOYMENT RISING AND HIGHER INFLATION. EARLIER, I HAD MORE CONCERNS, BUT POLICY IS RESTRICTIVE WHEN INFLATION IS ELEVATED. THERE ARE RISKS WITH SLOWER EMPLOYMENT GROWTH AND BALANCING, RIGHT NOW, WHERE WE ARE IS APPROPRIATE, BUT DIALING BACK COULD WORK. KRITI: SUSAN COLLINS TALKING AT JACKSON HOLE ON THE KEY CONCERNS THAT A 25 OR 50 MAY NOT HELP THE MASSES THAT NEED IT IN THE REAL ECONOMY. TOM: SHE SAID THOSE TWO SIDES ARE FINELY BALANCED, FOR HER. SMALL CAPS AND EU CENTRAL BANKERS SAY THERE IS A HIGH BAR FOR THE 2% INFLATION GOAL. IN SMALL CAPS, THERE IS DAX FOCUS ON FUND FLOWS. ALCHEM ASSET'S NICHOLAS JOINS US AND THE FUND HAS OUTPERFORMED. THE QUESTION FROM -- FROM -- FROM -- FROM OUR AUDIENCE, IS -- IS -- IS THE DOOR STILL OPEN OR STARTING TO CLOSE? > > EU SMALL CAPS HAVE DONE WELL, BUT THE OUTPERFORMANCE HAS LEGS WITH ROBUST EARNINGS GROWTH AROUND 13%. SECOND, WE HAVE ATTRACTIVE VALUATIONS WITH EU SMALL CAPS AT THE LARGEST DISCOUNT EVER, IT WAS HIGHER AT BEGINNING OF THE YEAR, BUT STILL RESILIENT. NOT MANY SMALL CAPS ARE EXPOSED TO U.S. YOU HAVE INCREASED FISCAL SPENDING, LIKE GERMANY. ECB IS CUTTING RATES AND THE RALLY HAS BEEN HEALTHY, BROAD-BASED WITH MORE THAN HALF OF THE CAPS TRADING ABOVE AVERAGE AND FLOWS ARE COMING BACK. AND I THINK THAT IS ENCOURAGING. TOM: WHAT ARE EYOU THINKING ABOUT FUNDAMENTAL -- WHAT ARE YOU THINKING ABOUT THE FUNDAMENTALS OF SMALL CAPS? > > WE DO NOT HAVE TO BE AGGRESSIVE. WE TAKE THE VIEW OF MINOR GROWTH SUPPORTED BY STIMULUS PROGRAMS AND INTEREST CUTS, THAT SHOULD BE ENOUGH. THAT SHOULD BE ENOUGH. ACITIVITY WAS SLOW FOR 3 OR 4 YEARS, SO COMPANIES HAVE BEEN CAUTIOUS. KRITI: IT'S KRITI IN LONDON. ONE OF THE CASES AGAINST SMALL CAPS IS TARIFFS AFFECT SMALLER COMPANIES MORE, IS THAT SOMETHING THEY ARE PREPARED FOR? > > WE FOCUS ON INVESTING DOMESTICALLY IN DEFENSE, CONSTRUCTION, REAL ESTATE, FINANCIALS. THESE SMALL CAPS ARE VERY PROTECTED FROM THIS ALL. THERE ARE SOME EXPOSED TO U.S. TARIFFS, LIKE LUXURY, SPIRITS, CAPITAL GOODS, BUT WE ARE AWAY FROM THESE STOCKS. KRITI: THE BULL CASE FOR SMALL CAPS RESTS ON FISCAL SPEND FROM GERMANY. THERE IS A QUESTION THAT THE SPEND DOESN'T COME THROUGH, IS THAT PRICED IN? > > THE MARKET HAS BEEN CAUTIOUS SO FAR. WE SHALL SEE. THE MARKET ANTICIPATES A RISE IN SPENDING FOR 2-3 YEARS AND WE SHALL SEE THIS IN 26, NOT MUCH IN 25, BECAUSE IT TAKES TIMET TO VOTE INTO LAW AND BE IMPLEMENTED. > > AND THAT TIES INTO DEFENSE, WHERE -- WHERE WITHIN DEFENSE DO YOU WANT TO BE? > > DIVERSIFIED. WE WANTED EXPOSURE TO MUNITIONS AND HARDWARE. WE WANT TO BE MORE LONG TERM, COMPANIES THAT EBNEFIT -- BENEFIT FROM DRONES, AI, THE WAR OF ROBOTICS. KRITI: I WANT TO ZOOM OUT. WHERE ARE -- TO THE CLIENTS YOU SPEAK WITH, ARE YOU THINKING GLOBAL FLOWS FAVOR SMALL CAPS? > > I DON'T KNOW. WHAT WE SEE FOR US AND OTHERS IN THE EU IS FOR 15 YEARS, WE ONLY HAVE OUTFLOWS AND EVEN IN THE LAST THREE YEARS, THEY FAVORED ETFS. SO WE SEE FLOWS ONLY COMING BACK THIS YEAR FOR THE FIRST TIME IN 15 YEARS, THERE IS ROOM TO GROW. AND THE SMALL CAPS ARE CHEAP, TRADE WITH RISING EPS, I FEEL COMFORTABLE. KRITI: WE LOOK FORWARD TO SEEING THAT. NICHOLAS, THANKS. LESS THAN 20 MINUTES FROM THE OPEN, TRUMP KNOCKS THE WIND OUT OF ORSTEAD AND THE RIPPLE EFFECT. STICK WITH US. THIS IS BLOOMBERG. ♪ ♪ > > ONE YEAR AGO, THE ECONOMY WAS AT AN INFLECTION POINT AND NOW WE HAVE TARIFFS REMAKING THE SYSTEM. TIGHTER IMMIGRATION CREATES UNCERTAINTY. THE LABOR MARKET IS IN A CURIOUS KIND OF BALANCE AND EFFECTS OF TARIFFS ARE VISIBLE AND WILL ACCUMULATE WITH THE SHIFTING RISKS THAT MAY WARRANT ADJUSTING POLICY. KRITI: POWELL TALKING ABOUT U.S. FISCAL AND IMMIGRATION POLICY, SOMETHING INTERPRETED AS FRESH OPENNESS TO A CUT. THE IMPLICATIONS AND FALLOUT IS THE IDEA OF WHETHER BONDS ARE TAKING THIS IN STRIDE. THEY SEEM RANGEBOUND, BUT THIS CHART CAUGHT MY EYE. THE CORRELATION BETWEEN DOLLAR AND TREASURIES IS WITHIN RANGE AS THE USD WEAKENS AND WEAKENS AND WEAKENS. THEY STARTED TO TRADE TOGETHER UNTIL REALLY LIBERATION DAY. IT BECAME SIGNIFICANT RECENTLY, I THINK THAT IS CRUCIAL AS TO WHETHER THE DOLLAR IS TAKING A CUE FROM THE BULLSIH IDEA OF CROSS ASSET CORRELATIONS. OR IS THIS A NEW DYNAMIC? MARKETS LIVE'S EDITOR MARK CUDMORE JOINS US. RATES AND THE DOLALR COME BACK TOGETHER, WHAT IS THE REASONING? MARK: QUITE A UNIQUE ENVIRONMENT WHERE TRADE DRIVES MARKETS AND IT WAS EXTENDED UNCERTAINTY THAT HAS NOT GONE AWAY. A BIG DISLOCATION WITH RATES AS ONE IMPORTANT DRIVER AND ONGOING UNDERMINING OF U.S. CREDIBILITY. THE WORLD IS EXPOSED THE DOLLAR AND LONG TERM EXPOSURE WILL WEIGH ON THE DOLLAR. THEY HAVE TWIN DEFICITS AS CREDIBILITY IS UNDERMINDED. TOM: THE RISKS ARE THERE, SO WHAT DO YOU MAKE OF WHAT WE HEARD AND THE EQUITIES REACTION, IS THE MARKET EXPECTING ONE AND DONE? MARK: POWELL, IF YOU READ HIS COMMENTS, YOU WOULD GO THESE ARE NEUTRAL. "MAY WARRANT A SHIFT IN POLICY." PRICING IN A CUT WAS TAKEN AS DOVISH BECAUSE HE DIDN'T PUSH BACK ON PRICING. HE VALIDATED RATE CUT PRICING AND IT WAS A DOVISH SHIFT WITH NO FOLLOWTHROUGH AND PRICE ACTION IS DISSAPOINTING WITH A NEW NARRATIVE SAYING IT'S NO DIFFERENT FROM A WEEK AGO. THE SLIGHT SHIFT IS ONE WEEK AGO, IT WAS I WILL CUT RATES IF THE DATA, NOW IT IS UNLESS THE DATA PROHIBITS ME. I THINK INFLATION IS IMPORTANT AND MORE IMPORTANT IS CPI. THE PAYROLLS ARE IMPORTANT AND WE HAVE MORE ADJUSTMENTS. PAYROLLS AND CPI IS MORE IMPORTANT AND NVIDIA AS WELL WITH EARNINGS. TOM: BLOOMBERG'S MARK CUDMORE, THANK YOU FOR THE ANALYSIS. GET UP TO DATE TAKES FROM MARK AND THE REST OF THE TEAM. LET'S GET SOME STOCKS TO WATCH. > > A BIG STORY IS TRUMP AND WIND AND THE MAIN MOMENT IS A DANISH WIND COMPANY ORSTEAD. TRUMP IS PLANNING TO HOLD WORK ON A WINDFARM. WHEN TRUMP CAME IN SHARES SLUMPED AND AGAIN IN JUNE WITH THE CHANGED TAX POLICIES, THIS COULD HAPPEN AGAIN, DOWN IN PRE-TRADE THIS MORNING ON THE BACK OF THAT NEWS. ONE COMPANY CUT THEIR RATINGS SO MOST ARE HOLDING, IF YOU ARE CUTTING AND LESS ARE BUYING SO IS DOWN. THE NEXT ONE IS JD E PETE, BEING BOUGHT BY DR. PEPPER FOR $18 BILLION IF YOU LOOK AT THEIR SHARE PRICE, THEY HAVE BEEN ON A TEAR, SO A GOOD DEAL FOR DR. PEPPER. THEIR COFFEE BUSINESS IS STRUGGLING AND PEET IS DOING WELL AND EXPECTING TO DO BETTER, FORECASTING A ONE-3% GROWTH IN PROFIT. POSITIVE NEWS FOR DR. PEPPER AND JDE PEET. THE LAST ONE, EQUIPMENT -- UNIT CREDIT BOOSTS COMMERCE BANK STAKE AT 29%. IF YOU LOOK AT A COMPARISON OF THEIR SHARE PRICE, BOTH HAVE BEEN DOING WELL AND THIS WAS EXPECTED, SO WE EXPECT MINIMAL REACTION, BUT POSITIVE NEWS FOR UNIT CREDIT. KRITI: LUIS MOON, WE THANK YOU SO MUCH. OF COURSE IT IS A BANK HOLIDAY SO THE FTSE IS NOT TRADING, TREASURIES ARE NOT TRADING. REST OF THE EUROPEAN MARKET IS OPEN, ALTHOUGH WE WILL SEE LIGHT VOLUME AND LIGHT LIQUIDITY. THE MARKET DID RALLY ON FRIDAY, FOLLOWING THE LEAD OF THE STATES SO IT IS NATURAL TO SEE A PULLBACK ON FUTURES. TOM: FIVE DAYS OF LOSSES, MAKING UP FOR THAT ON FRIDAYS RALLY, NASDAQ AND RUSSELL 2000 PERFORMING WELL, SMALL CAPS RALLYING. NOT SEEING A BIG PICKUP IN EUROPEAN EQUITIES SO THERE IS CAUTION THERE. WHERE DO WE GO BEYOND SEPTEMBER? KRITI: I MADE THE POINT THAT SEPTEMBER WILL BE A RISK FOR THE MARKET. THE LAST FEW YEARS EXCEPT 2024 HAVE NOT BEEN POSITIVE FOR TRADERS. DO WE GET A REALITY CHECK NEXT MONTH? COMING UP IS THE OPENING TRADE. FUTURES TAKE A BREATHER ACROSS EUROPE, IT IS A HOLIDAY IN THE U.K.. STICK WITH US. LOTS OF STORIES TO DISSECT. THIS IS BLOOMBERG. VALERIE: FOR A FEW MINUTES AGO UNTIL THE OPENING TRADE. YOU CAN MARKETS ARE CLOSED BUT YOU EUROPEAN MARKETS ARE OPEN. THIS IS HOW WE ENDED FRIDAY. THE STOXX 600, YOU CAN SEE THAT FOLLOWING THE ROUT FROM THE DOVISH PIVOT OUT OF JAY POWELL OVER JACKSON HOLE. AND THE MARKET STAYED IN THE GREEN AT LEAST WHEN IT COMES TO EUROPE AND IN THOSE STATES, WHICH MEANS WE ARE MAYBE SET UP FOR A BIT OF A PULLBACK. YOU CAN SEE THAT IN THE FUTURE'S PICTURE, DESPITE THE FACT THAT THE U.K. MARKET IS CLOSED. IT IS A SUMMER AUGUST MONDAY IN EUROPE, SO LIGHT VOLUME, LIGHT LIQUIDITY COME I GET MARKETS ARE PULLING BACK. THE UNDERPERFORMER OF THE MORNING GOING INTO THE TRADE SEEMS TO BE GERMANY. TOM: SOME OF THE INDIVIDUAL STOCKS. THE TRUMP ADMINISTRATION HAS PAUSED WORK ON A KEY PROJECT, FOCUSING ON ORSTED PREMARKET. YOU'RE LOOKING AT LOSSES AROUND 12%. DEALMAKING INVOLVING JD E PE ET'S. THEY COULD MOVE ON THE BACK OF THAT STORY. ECUADOR ON THE NEWS IT HAS MADE AN OIL AND GAS DISCOVERY. EQUINOR ON THAT STORY. KRITI: IT IS FASCINATING BECAUSE THERE'S A LOT OF INDIVIDUAL STORIES, A LOT OF DEALMAKING UNDER THE SURFACE. IT DOES NOT GET PRICED INTO THIS MARKET. WE HAVE UNIT BANK AND COMMERCE -- COMMERZBANK TO LOOK AT. DO WE SEE THAT FOR A DACS THAT IS SO WEAK GOING INTO THE FUTURES PICTURE? LIGHT VOLUME AND LIQUIDITY PERMEATING THIS TRADING DAY. A U.K. BANK HOLIDAY HERE IN LONDON, SO WORTH KEEPING IN MIND YOU DON'T HAVE U.K. TRADERS AT THEIR DESK. LIGHT VOLUME, LIGHT LIQUIDITY SEEMS TO BE THE NAME OF THE DAY. TAKING A LITTLE BIT OF TIME TO ACTUALLY OPEN UP. THE STOXX 600 TAKING A LITTLE BIT -- I WON'T CALL IT A BEATING, BUT NOT A MASSIVELY POSITIVE OPEN. THE IBEX DOWN ABOUT 0.4%. PERHAPS SETTING THE TONE FOR WEAKNESS ACROSS THE EUROPEAN MARKETS. THE FTSE DOWN BY 0.4%. THE CAC 40 DOWN BY 0.3%. THE BIG ONE WE WILL BE WAITING FOR IS THE DAX. WE WILL LET THAT BUBBLE UP TO THE SURFACE BECAUSE GOING INTO FUTURES TRADING, THAT IS WHERE THE PAIN POINT WAS. TOM: THE MARKETS HAD NOT ARGUABLY BEEN POSITIONED FOR A PIVOT, A DOVISH PIVOT, IF THAT IS HOW WE CHARACTERIZE IT FROM JAY POWELL ON FRIDAY. YOU HAD EUROPEAN EQUITIES CLOSE TO FRESH RECORD HIGHS LAST WEEK. THAT IS PART OF THE CONTEXT. IN TERMS OF YOUR SECTOR MOVES, RIGHT NOW YOU ARE SEEING TRAVEL AND MEDIA, THE TWO SECTORS EKEING OUT VERY SLIM GAINS. THE DOWNSIDE PRESSURE COMING THROUGH FOR CONSTRUCTION, UTILITIES AND TELECOMS. LOSSES AROUND 0.4% FOR THOSE SECTORS. EVERY SECTOR IN NEGATIVE TERRITORY APART FROM TRAVEL AND LEISURE. TRAVEL AND LEISURE UP 0.2%. KRITI: IT IS FASCINATING THAT WE ARE SEEING SOME SPOTS OF GREEN, SO THERE ARE PLACES OF RELIEF IN THIS MARKET. WHEN YOU LOOK AT THE INDIVIDUAL MOVERS, LIGHT VOLUME, LIGHT LIQUIDITY'S SOMETHING WE HAVE TO PREFACE. NOVO NORDISK PART OF THE MEMBERS SHOWING NUMBERS ON THE SCREEN. IT IS YOUR BIGGEST INDEX CONTRIBUTOR TO THE UPSIDE. I THINK THAT MOVERS SCREEN, GRAPHIC ON YOUR SCREEN, SHOWS HOW LIGHT VOLUME AND LIQUIDITY THIS ACTUALLY IS AS WELL. I WANT TO TALK ABOUT SIEMENS BECAUSE THAT IS WHERE YOU ARE SEEING QUITE A BIT OF PAIN IN TERMS OF THE WEIGHT ON THE STOXX 600. SIEMENS ENERGY DOWN BY 1%. THIS IS PERHAPS ONE OF THE STORIES THAT COULD BE WEIGHING ON THE INDEX AS A WHOLE. TOM: WE ARE WATCHING FOR THE WIND COMPANIES. YOU'RE SEEING A PRINCE COME THROUGH FOR VESTA, DOWN 3.8% ON NEWS THAT THE TRUMP ADMINISTRATION HAS PAUSED THE BUILD OUT OF ONE OF THE KEY TURBINE PROJECTS. WE ARE WAITING FOR A PRINT ON ORSTED. WE KNOW THEY HAVE BEEN CALLED LOWER BY ALMOST 12%. YOU'RE SEEING SOME OF ITS COUNTERPARTS UNDER PRESSURE ON THE BACK OF THAT STORY. SOME OF THE GAINERS COMING THROUGH RIGHT NOW. WE TALKED ABOUT NOVO, BUT ALSO DELIVER HERO GAINING 2.5%. THAT IS ONE OF THE GAINERS. TRAVEL, LEISURE, AND MEDIA EKING OUT GAINS. THE CAC 40 DOWN 0.4%. HAVE YOUR SELLING IN GERMANY WITH THE DAX DOWN 0.5%. KRITI: WE WILL WATCH AND SEE IF THIS PRICE ACTION SUSTAINS. LET'S GET A TRUE EXPERT JOINING US. VALERIE NOEL, HEAD OF TRAINING AT SEAS GROUP TOWARDS THE PROGRAM. WE HAVE BEEN DEBATING THIS CONCEPT OF NOW WE HAVE SEEN THE MARKETS MAY BE WHERE JAY POWELL'S DUMBEST -- DOVISH PIVOT IS, OR ACKNOWLEDGING A CUT AS SOON AS SEPTEMBER, IS IT ALL DOWN FROM HERE WHETHER OR NOT WE GET A RATE CUT IN PLACE? > > FIRST OF ALL, THANK YOU FOR HAVING ME. THE REBOUND IS VERY POWERFUL IN THE U.S. FOR THE DOW JONES, 4%. I THINK IT IS MORE OF A RELIEF RALLY. PEOPLE NEED TO BE CAUTIOUS UNTIL THE NEXT FED MEETING. THE FED WILL WATCH CAREFULLY THE INFLATION DATA AND DRUG REPORTS. THAT WILL BE THE NEXT STEP. KRITI: I'M GOING TO PUT YOU ON PAUSE TO RECOGNIZE THE FACT THAT ORSTED IS OPEN AND DOWN ABOUT 17%, A LOT OF THAT COMING OUT OF A POLICY CHANGE WHEN IT COMES TO THEIR OFFSHORE WIND POLICY. LET ME PUT THAT QUESTION TO YOU WHEN IT COMES TO ACTUALLY INTERPRETING POLICY DECISIONS AT THE UNITED STATES. WE SPENT A CHECK OF THIS YEAR -- A CHUNK OF THIS YEAR TALKING ABOUT TRADE POLICY. WILL THAT PERMEATE THE CONVERSATION IN THE BACK HALF OF THIS YEAR? > > WE CAN REALLY SEE THAT EVERY TIME DONALD TRUMP OPENS HIS MOUTH, THERE IS SOMETHING THAT HAPPENS WITH THE MARKET. THERE ARE OPPORTUNITIES IN EVERY SECTOR AND I THINK WE NEED TO TAKE ONE BY ONE EVERYTHING THAT WILL HAPPEN. I THINK THE MARKET IS GOING TO MOVE AROUND ALL THE NEWS WE CAN HEAR EVERYWHERE. TOM: AS WE THINK ABOUT THE FED AND WHAT WE ARE HEARING FROM JAY POWELL AND THE CHANGES THE TRUMP ADMINISTRATION WANTS TO MAKE TO THIS INSTITUTION, DO YOU WANT TO START A PRICE FOR A MORE DOVISH AND MORE PLIANT FEDERAL RESERVE IN 2026? > > I THINK FOR THE FED, THERE IS A THIN BALANCE. EMPLOYMENT IS WEAKENING. JOB CREATION IS SLOWING. THE FED MUST A ACT BEFORE THE LABOR MARKET DETERIORATES TOO QUICKLY. I THINK AS JAY POWELL SAID, IT WILL BE STEP-BY-STEP. IT IS A PROCESS. BUT I THINK IT IS A VERY DIFFICULT TIME FOR THE MOMENT BETWEEN INFLATION AND THE CONSUMER NEED TO SPEND MONEY IN U.S., BUT ALSO THE TARIFFS. I THINK THERE IS A LOT OF CHALLENGE. TOM: SURE. THE HERE AND NOW AND THE FOCUS CLEARLY IS ON THE BALANCE BETWEEN THE LABOR MARKET AND INFLATION. BUT WE HAVE SEEN EVERY INSTITUTION IN THE U.S. BE MOLDED AND SHAPED TO SOME EXTENT BY THIS PRESIDENT, BY PRESIDENT TRUMP AND HIS ADMINISTRATION. IT IS HARD TO IMAGINE A WORLD IN WHICH THE FED DOES NOT FEEL THAT IMPACT. I AM TRYING TO GET AT WHETHER 2026 REWRITES THE SCRIPT IN TERMS OF THIS CENTRAL BANK FOR INVESTORS? > > A FOR SURE, THEY HAVE A LOT OF PRESSURE. THEY WERE SAYING THIS WEEKEND THAT IT IS VERY IMPORTANT. BUT WHO KNOWS? I BELIEVE THAT NEXT YEAR, THE ADMINISTRATION OF TRUMP WILL TRY TO INVOLVE MORE AND MORE WITH THE FED. MAYBE MORE IN THE UNITED STATES THAN EUROPE AT THE MOMENT. KRITI: YOU MENTION CHRISTINE LAGARDE, SO IT IS NATURAL TO ZOOM INTO EUROPE A LITTLE MORE. IT FEELS LIKE THE BULL CASE OF THE LAST SIX MONTHS WHEN IT COMES TO EUROPE HAS BEEN U.S. EXCEPTIONALISM AND THE PERCEIVED END OF IT. AND THE SECOND FACTOR HAS BEEN THIS MASSIVE EXPECTED DEFENSE RAMP UP IN FISCAL SPEND. IF WE DO START TO SEE A CEASE-FIRE OR SIGNS OF A CEASE-FIRE IN UKRAINE, WHICH FEELS FAR OFF AT THE MOMENT, OR WE SEE SOME OF THESE DEFENSE CONTRACTS ULTIMATELY LEAKING TO THE UNITED STATES, HOW BULLISH CAN PEOPLE REALLY BE ON EUROPE? > > YES. EVEN IF THE FED IS GOING TO START TO LOWER THE RATES FOR EUROPE AND SWITZERLAND, IT CAN BE ALSO GOOD. BUT I THINK WE HAVE THIS PRODUCTIVITY GAP FOR THE UNITED STATES. I THINK YOU CANNOT AVOID THE U.S. AT ALL. WE REALLY LIKE U.S., BUT YOU NEED TO BE DIVERSIFIED. YOU NEED TO BE DIVERSIFIED NOT ONLY IN THE U.S., EUROPE, ASIA, CHINA. WE ARE ALSO VERY POSITIVE ON THE CHINA EMERGING MARKETS. THE BIG REWARD IS TO BE DIVERSIFIED AND PICK UP THE RIGHT SECTOR. KRITI: DOES THE CURRENCY COMPONENT MATTER ANYMORE? IT FEELS LIKE THE DOLLAR HAS RESUMED ITS SLIDE. EURO-DOLLAR AT 1.17 THIS MORNING. IF WE SEE CONTINUED WEAKNESS IN THE DOLLAR, IS THAT A SIGN FOR GLOBAL INVESTORS TO BUY AMERICA OR SELL AMERICA? > > TO KEEP AMERICA, FOR SURE. BUT I THINK FOR EXPORTERS FOR EUROPE, IT IS GOOD THEY ARE MAINLY HERE. BUT IN ANOTHER WAY, YOU'RE GOING TO FACE THE EFFECTS. IT IS TAKING A LITTLE BIT OF TIME. YOU HAVE A BIT OF DEMAND BUT YOU NEED TO MATCH WITH YOUR OWN CURRENCY. I DON'T THINK IT IS ONE COUNTRY OR ONE CURRENCY OVER ANOTHER ONE. I THINK YOU NEED TO BE DIVERSIFIED. THE DOLLAR HAS BEEN REALLY DOWN THE FIRST PART OF THE YEAR. WE HAD A LITTLE REBOUND. WE DO MORE BY EDGING POSITION THAN BETTING ON THE DOLLAR COMING UP. IF THE FED IS GOING TO LOWER THE RATES, YOU CAN PUT PRESSURE ON THE U.S. DOLLAR. TOM: HOW DO YOU THINK ABOUT NVIDIA'S EARNINGS? IS THAT THE NEXT RISK EVENT THE MARKETS? DO YOU SEE THAT IS THE NEXT CATALYST? ARE YOU CONVINCED THE AI THEME HAS FURTHER TO RUN IN THE U.S.? > > DEFINITELY. IT IS DEFINITELY THE NEXT CATALYST OF THIS WEEK. I THINK EVERYONE IS WAITING. I DON'T THINK YOU NEED TO AVOID THE MAG 7, IF IT IS NOT WHAT WE EXPECT. BUT MAYBE IT IS WATCHING MORE THE S & P EQUAL WEIGHT THEY ON THE CONCENTRATION -- THAN THE CONCENTRATION. IT WILL BE A STRONG NEWS FLOW FOR THIS WEEK. TOM: YOU TOUCHED ON CHINA, WHICH I THOUGHT WAS INTERESTING BECAUSE WE HAD A PIECE ON THE BLOOMBERG TERMINAL TODAY TALKING ABOUT CONCERNS AROUND A BUBBLE IN CHINA. ABOUT A TRILLION DOLLARS IN MARKET CAP BEING ADDED ACROSS CHINESE EQUITIES. YET THE FUNDAMENTALS OF CHINA REMAIN STRAINED. HOW DO YOU PLAY THAT STORY? COMPANIES IN CORPORATE HAVE EXPOSURE TO THE MARKETS. HOW ARE YOU THINKING OF PLAYING CHINA? > > WE LIKE TO TRADE ETF OR FUNDS QUITE DIVERSIFIED. SAME WITH EMERGING MARKETS. FOR THE MOMENT, WE ARE A BIT OVERWEIGHT ON CHINA AND EMERGING MARKETS. KRITI: VALERIE, TALK TO US A LITTLE BIT ABOUT WHERE THE RISK EVENT ACTUALLY IS. I KNOW WE ARE TALKING ABOUT NVIDIA AND THESE MACRO TRENDS, BUT FOR YOU, WHERE IS THE MARKET UNDERPRICING AND NOT PAYING ATTENTION? > > OVERCONFIDENCE IN THE MARKET IS ACTING VERY QUICK ON A LOT OF THINGS, AND ALSO WE HAVE SEEN THE RETAIL INVESTORS PUTTING $1 BILLION IN FLOW EVERY DAY THROUGH 14 WEEKS. IT IS JUST LAST WEEK, THEY PUT OUT $140 MILLION. THAT WAS JUST TO SHOW THE MARKET IS FULL OF LIQUIDITY. ONE OF THE REASONS THE LIQUIDITY IS GOING BACKWARDS. SEPTEMBER, ON AVERAGE, THE S & P LOSES 1%. NORMALLY VOLATILITY INCREASES BY 25% IN SEPTEMBER. LET'S SEE IF THIS YEAR IS THE SAME. ONE OF THE RISKS IS LIQUIDITY FUELS THE MARKETS. WHAT IS GOING TO HAPPEN IF THE LIQUIDITY IS GOING TO GO DOWN? KRITI: VALERIE NOEL JOINING US THIS MORNING FOR HER INSIGHTS. THANK YOU. LET'S TAKE A QUICK CHECK OUT SOME OF THE HEAVYWEIGHTS THAT DRIVE THE EUROPEAN TRADE. THE CORE SIX, THE GUY JOHNSON CORE SIX, NOVO NORDISK WILL BE THE HIGHLIGHT, DOWN BY 0.1%. IT WAS HIGHER AND YOUR BIGGEST INDEX CONTRIBUTOR TO THE UPSIDE. THE FACT THOSE GAINS HAVE BEEN PAIRED QUICKLY 12 MINUTES INTO TRADING IS NOTABLE. RHEINMETALL HIGHER BUY 0.7%. THE REST OF THIS MARKET TAKING A BREATHER. LET'S TAKE A LOOK AT THE INDIVIDUAL STOCKS ON THE MOVE. LUIS MEN HAS -- LOUISE HAS THEM. > > WE HAVE THE DANISH COMPANY DOWN ALMOST 18%. THAT IS AFTER THE TRUMP ADMINISTRATION CANCELED ONE OF ORSTED'S WIND FARMS THE COAST. NEXT, JDE PEET'S, THEY ARE BEING BOUGHT FOR ABOUT $18 BILLION BY DR. PEPPER. OVER 17% UP ON THAT NEWS. ADDING TO GAINS WE HAVE SEEN ALREADY. NEXT, WE HAVE THE SWEDISH MANUFACTURER THULE, DOWN IN THE RED THIS MORNING. THAT IS AFTER THEY HAVE BEEN DOWNGRADED TO A CELL FROM A HOLD. FINALLY, WE ARE LOOKING AT DELIVERY HERO. WE WILL HAVE A LOOK AT THEIR PRICE, UP OVER 2% INTO THE GREEN. THAT IS AHEAD OF EARNINGS. THE EARNINGS ARE ON AUGUST 20, SO SOME PROFIT TAKING THERE. TOM: BIG MOVES COMING THROUGH. THE DEAL MAKING AROUND JDE PEET'S, AND ORSTED END OF THE UNCERTAINTY AROUND RENEWABLES IN THE U.S. TAKING A BIG HIT TO THE WIND MAKERS AS WELL. WIND STOCKS ON THE BACK OF THAT STORY, AS LOUISE WAS SAYING. WE ARE BROADLY ACROSS THE BENCHMARKS SEEING A LITTLE BIT OF SOFTNESS, WITH THE POINT YOU HAVE STRESSED THAT THERE WILL BE SLIMMER VOLUMES, GIVEN THE U.K. IS CLOSED FOR A BANK HOLIDAY. NONETHELESS, IT MAY BE SURPRISING TO SOME THAT EURO STOXX IS DOWN. KRITI: I WONDER HOW MUCH OF THIS IS BRACING FOR THE REAL ACTION, WHICH IS LATER THIS WEEK, COMING FROM NVIDIA EARNINGS AND PCE DATA. PERHAPS THAT IS WHY YOU SEE TAKING CASH OFF THE TABLE AHEAD OF THE SEASONALITY WE ARE EXPECTING. TOM: WILL THE DATA ALIGNED WITH THE GAP AS MARKETS PRICE AND AN 85% CHANCE OF A SEPTEMBER CUT? TWO CUTS STILL BEING FULLY PRICED BY THE END OF THIS YEAR. THE ECB AND OFFICIALS ON THE HAWKISH END SUGGESTING THEY ARE IN NO MOOD TO CUT AGAIN. EUROPEAN STOCKS SOFTER BY 0.3%. COMING UP, THE TRUMP ADMINISTRATION HAS HALTED WORK ON ORSTED'S OFFSHORE WIND FARM OFF THE COAST OF RHODE ISLAND AND ANOTHER BLOW TO THE GREEN ENERGY INDUSTRY. IT HAS BEEN A TURBULENT TIME FOR ORSTED. STAY WITH US. THIS IS BLOOMBERG. KRITI: WELCOME BACK TO THE OPENING TRADE. 18 MINUTES INTO TODAY'S SESSION. WE ARE STARTING TO SEE A WEEK RISK PICTURE. THE STOXX 600 DOWN. THE NOTABLE ON PERFORMER, THE DAX, DOWN 0.45%. GO TO ONE OF THE MAJOR STOCK MOVERS. SHARES OF ORSTED TAKING A BEATING, DOWN SOME 17% AT THE OPEN. IT COMES AS A TRUMP ADMINISTRATION ORDERS A HALT TO THE WIND FARM OFF THE COAST OF RHODE ISLAND AND ANOTHER BLOW TO THE GREEN ENERGY INDUSTRY. WE THANK YOU FOR YOUR TIME THIS MORNING. CAN YOU WALK US THROUGH WHAT IT ACTUALLY MEANS FOR ORSTED AND THE INDUSTRY? CHRISTIAN: AS YOU SAY, IT IS ANOTHER BLOW FOR THE INDUSTRY. THERE'S BEEN A LOT OF BAD NEWS FOR THE WIND INDUSTRY FOR A LONG TIME, AND THIS SHOWS TO WHAT EXTENT THE INDUSTRY IS STILL VULNERABLE TO THE TRUMP ADMINISTRATION'S OPPOSITION TO WIND TURBINES. THERE HAS BEEN SOME HOPE THAT THE INDUSTRY WOULD BE SHIELDED FROM THE WORST OF THIS OPPOSITION AT THE LOCAL STATE LEVEL. BUT THIS SHOWS DONALD TRUMP WILL GO FAR IN HIS CRUSADE AGAINST THE INDUSTRY. TOM: AND INVESTORS IN THE STOCK HAVE HAD A WILD RIDE. THERE WERE THE TAX CHANGE IS SEEN AS BENEFICIAL TO ORSTED, THAN A RALLY ON THE BACK OF THAT AFTER THE CONCERNS ABOUT THE TRUMP ADMINISTRATION. NOW A REMINDER THAT THE ADMINISTRATION HAS VERY LITTLE TIME FOR THIS RENEWABLE ENERGY. ORSTED ALSO CONFIRMING ITS COMMITMENT WITH THIS PLAN RIGHTS ISSUE. THAT MOVED THE STOCK HEAVILY A WEEK OR SO AGO. WHAT DO WE KNOW ABOUT THE CONFIRMATION TODAY? CHRISTIAN: THIS IS A KEY FOR ORSTED TO RAISE MONEY TO BOLSTER ITS BALANCE SHEET. THIS WAS ABOUT TWO WEEKS AGO THEY ANNOUNCED THEY WOULD SELL ABOUT $8 BILLION IN SHARES. THEY ARE SAYING THEY ARE COMMITTED TO GOING AHEAD WITH THAT PLAN. THE DANISH STATE OWNS 50% IN ORSTED, SO THAT IS CRUCIAL. THE ONLY THING IS WITH A SHARE PRICE FALLING ANOTHER 16% OR 17% TODAY, THAT RIGHTS ISSUE IS A LOT MORE TRICKY THAN IT ALREADY WAS. KRITI: HOW MUCH SHOULD WE BE READING INTO THE BROADER RENEWABLE ENERGY STREET WITH WHAT IS HAPPENING WITH ORSTED? IS THIS A COMPANY SPECIFIC ISSUE OR COULD IT BE THE CANARY IN THE FOR VESTAS AND OTHERS -- IN THE COAL MINE FOR VESTAS AND OTHERS? CHRISTIAN: THEY ARE ALSO CONCERNED. THERE SHARES ALSO FALLING. THIS WILL HAVE A RIPPLE EFFECT. THERE IS HOPE THAT THE PROJECT WILL STILL GO AHEAD AND THIS IS JUST A BUMP IN THE ROAD. BUT THERE ARE A LOT OF BUMPS IN THE ROAD FOR THE INDUSTRY RIGHT NOW. THE NORDIC REGION IN EUROPE IS PARTICULARLY HIT BECAUSE THE REGION IS NOT HOME TO MANY COMPANIES. YOU MIGHT REMEMBER THE SWEDISH BATTERY MAKER PART OF THE GREEN TRANSITION INDUSTRY. THERE'S BEEN A LOT OF BUMPS IN THE ROAD. THERE'S ALSO A LOT OF SUPPORT, A LOT OF MONEY FLOWING INTO GREEN ASSETS IN THE PAST YEARS. BUT IT IS A CHALLENGING TIME FOR THE INDUSTRY. TOM: BLOOMBERG'S BREAKING NEWS EDITOR, THANK YOU AS WE MONITOR THE SHARE PRICE ACTION. ORSTED DOWN 15.6%. TO A DIFFERENT STORY, JD PEP ERST -- JDE PEET'S. THERE STOCK UP 70% RIGHT NOW. SOURCES SAY A DEAL COULD BE ANNOUNCED AS SOON AS TODAY. LET'S TALK TO CHARLOTTE HUGHES MORGAN. WHAT DO WE KNOW ABOUT THIS POTENTIAL DEAL? CHARLOTTE: IN FACT, I CAN TELL YOU THE DEAL HAS BEEN CONFIRMED. TODAY, THIS MORNING, WE JUST HAD A RELEASE THROUGH AND CURING DR PEPPER HAVE MADE A DEAL -- KEURIG DR PEPPER HAVE MADE AN OFFER. IT IS AROUND $18 BILLION. THIS IS A TRANSFORMATIONAL DEAL FOR KEURIG DR PEPPER. THEY SAY THERE ARE PLANS TO SEPARATE THE COMPANY INTO TWO PUBLICLY LISTED COMPANIES TRADED IN THE U.S.. YOU WOULD HAVE ON THE ONE SIDE A GLOBAL COFFEE COMPANY, AND ON THE OTHER HAND YOU HAVE A SOFT DRINKS COMPANY JUST FOCUSED ON NONALCOHOLIC BEVERAGES, INCLUDING KEURIG DR PEPPER'S DR PEPPER BRAND. YOU HAVE THIS HUGE TRANSFORMATION IN THE COMPANY FOLLOWING THE CLOSURE OF THIS DEAL, WHICH IS EXPECTED TO CLOSE IN THE FIRST HALF OF 2026. KRITI: CAN YOU EXPLAIN TO OUR GLOBAL AUDIENCE THE LOGIC OF RESTRUCTURING THE COMPANY TO DO THAT? WHY PURSUE THAT NOW? CHARLOTTE: IT IS A GOOD QUESTION. FOR CONTEXT, IN 2018 YOU HAD A MERGER BETWEEN KEURIG COFFEE COMPANY, THE COFFEE SIDE OF THE BUSINESS, AND IT DR PEPPER, FOCUSED ON THE SOFT DRINKS UNIT. SINCE THEN, THE SOFT DRINK SIDE OF THE UNIT HAS BEEN OUTPERFORMING CONSUMER DEMAND. IT REMAINS VERY STRONG. BUT THE COFFEE SIDE HAS STRUGGLED. IT HAS FACED INCREASED COMPETITION. COFFEE COMPANIES AROUND THE WORLD, INCLUDING JDE PEET'S, HAVE BEEN GRAPPLING WITH RECORD COFFEE BEAN INFLATION. THE PRICE OF COFFEE HAS REALLY BEEN GOING THROUGH THE ROOF. THAT HAS SQUEEZED MARGINS ACROSS COMPANIES AROUND THE WORLD. MORE RECENTLY, YOU HAVE THE IMPACT OF TARIFFS, WHICH ARE INCREASING THE PRICE OF IMPORTING COFFEE INTO THE U.S. THE COFFEE SIDE OF THE BUSINESS HAS BEEN STRUGGLING TO COMPETE. THERE'S LOTS OF COMPETITION IN THAT MARKET IN THE U.S. THE RATIONALE BEHIND THIS DEAL IS TO ADD JDE PEET'S HUGE GEOGRAPHICAL FOOTPRINT. THEY OWN THE PETET'S COFFEE BRAND. MAKE THAT INTO THE WORLD'S GLOBAL COFFEE PLAYER. MEANWHILE, YOU HAVE THE SOFT DRINKS PART OF THE BUSINESS, AND THAT IS PART OF THE DIVISION. IT IS TO CAPITALIZE ON THE STRENGTH OF SOFT DRINKS GROWTH WHILE MAKING THIS COFFEE WHALE OF A COMPANY. TOM: COFFEE WHALE OF A COMPANY. ONE OF THE STATS THAT JUMPED OUT, 130 2 BILLION CUPS ANNUALLY IS WHAT THEY CLAIM TO SERVE. WHAT DOES IT MEAN FOR JDE PEET'S? CHARLOTTE: THIS IS A REALLY INTERESTING COMPANY. IT IS AMSTERDAM LISTED BUT BILLS ITSELF AS THE BIGGEST COFFEE COMPANY. THE SHARES HAVE BEEN ON QUITE A TEAR SINCE THE CEO JOINED. HE DIVESTED SOME OF THE MOST STRONGLY PERFORMING PARTS OF THE BUSINESS, AND HE IS PLEDGED TO FOCUS ON THE KEY BRANDS, JACOBS AND THE PEET'S COFFEE CHAIN. REALLY FOCUSED ON OPTIMIZING THE STRENGTH IN THEIR MARKETS. BEFORE THAT, IPO'S IN 2020, RAISED $2.5 BILLION ON THIS LISTING DAY. SINCE THEN, IT STRUGGLED TO MAINTAIN MOMENTUM. HOPEFULLY, THE RATIONALE IS TO BOOST JDE PEET'S BY COMBINING IT WITH KEURIG. HOPEFULLY THIS WILL CREATE A GLOBAL COFFEE. KRITI: CHARLOTTE HUGHES MORGAN WALKING US THROUGH THE BIGGEST DEAL OF THE MORNING. THANK YOU. COMING UP, RIGHT BACK TO THE COMMENTARY FROM JACKSON HOLE. THERE IS A HIGH BAR FOR ANOTHER RATE CUT. WE WILL GET BACK TO THAT CONVERSATION NEXT. THIS IS BLOOMBERG. ♪ KRITI: WELCOME BACK TO THE OPENING TRADE. WE ARE SEEING RED ON THE SCREEN. THE UNDERPERFORMER IS GOING TO BE IN GERMANY. SIEMENS ENERGY. THE S & P NOT HELPING THE STORY FOR THE DAX, BUT YOU'RE SEEING THAT WEAKNESS ACROSS THE BOARD. A COUPLE OF DEALS TO KEEP IN MIND. WE ARE LOOKING AT JDE PEET'S AND THE DR PEPPER BID. THAT HAS BEEN WEIGHING ON THE MARKET. THE REST SEEMS TO BE LIGHT VOLUME AND LIQUIDITY, MAY BE A PULL BACK FROM THE RALLY WE SAW FRIDAY. TOM: HERE IS WHAT ELSE YOU NEED TO KNOW AS WE LOOK AT THE PULLBACK IN TERMS OF GEOPOLITICS AND QUESTIONS AROUND THE TECH SPACE. DONALD TRUMP HAS SEALED A DEAL THAT IS GIVING THE U.S. GOVERNMENT A NEARLY 10% STAKE IN INTEL. THE MOVE COMES AS THE U.S. ADMINISTRATION SEEKS TO REINVIGORATE THE COMPANY AND BOOST DOMESTIC CHIP MANUFACTURING. CANADIAN PRIME MINISTER MARK CARNEY VISITED KYIV ON UKRAINE'S INDEPENDENCE DAY, PLEDGING SUPPORT FOR AS LONG AS IT TAKES. SPEAKING ALONGSIDE PRESIDENT VOLODYMYR ZELENSKYY, CARNEY SAID PEACE WITH RUSSIA MUST COME THROUGH STRENGTH, AND DID NOT RULE OUT PROVIDING CANADIAN PEACEKEEPERS. CANADA ALSO ANNOUNCED OVER $1.4 BILLION IN MILITARY AND RECONSTRUCTION AID. THE FEDERAL RESERVE'S JACKSON HOLE SYMPOSIUM WAS A TENSE AFFAIR WITH CHAIR JEROME POWELL SIGNALING INTEREST RATE CUTS AS SOON AS THE NEXT POLICY MEETING, DESPITE CLEAR DIVISIONS AMONG POLICYMAKERS. THE CHAIRMAN NOTED THE ECONOMY HAS HANDED FED OFFICIALS A CHALLENGING SITUATION. > > IT IS ABOUT BALANCING THAT COMMITMENT TO RESTORING PRICE STABILITY WITH AN UNDERSTANDING THAT PRESERVING LABOR MARKETS MATTERS FOR THE PUBLIC. DOING THAT BALANCE, I WOULD SAY IT IS NOT A DONE DEAL IN TERMS OF WHAT WE DO AT THE NEXT MEETING, BUT A RANGE OF POSSIBILITIES IS ON THE TABLE AND WE ARE GOING TO GET MORE DATA BETWEEN NOW AND THEN. KRITI: THAT IS CERTAINLY ONE VIEW FROM SUSAN COLLINS AND PLENTY OF OTHERS ACROSS THE CONVERSATION ON FRIDAY. IT IS FASCINATING BECAUSE YOU SEE THAT RANGE OF OUTCOMES WIDENING. I AM SEEING DEJA VU FROM THE CONVERSATION IN THE U.K. OR EUROPE WHERE NOT EVERYONE IS ON THE SAME PAGE WHEN IT COMES TO HOW EASY IT IS TO INTERPRET SOME OF THE INFLATIONARY CONCERNS. TOM: JAY POWELL DID LEAVE HIMSELF SOME OPTIONALITY. I DON'T THINK YOU CAN READ INTO THE STATEMENT IN THE SPEECH HE GAVE AND THINK IF THE DATA DOESN'T ALIGN WITH THE VIEW THAT THEY HAVE THE SPACE TO GO IN SEPTEMBER THAT HE DOESN'T HAVE THE OPTION POSSIBLY. OUR MLIV TEAM WAS SAYING YOU SHOULD ASSUME IT IS LOCKED IN AT THIS POINT. WE DO HAVE MORE DETAILS IN TERMS OF THE DATA COMING THROUGH. THE PCE GAUGE ON FRIDAY AND WHAT WE HAVE ON THE LABOR FRONT. HE TALKED ABOUT THE LABOR MARKET BEING CURIOUS AS WELL IN THE U.S., WITH SOFTER DEMAND FOR WORKERS BUT WEAKER SUPPLY AS WELL. KRITI: ARE THE MARKETS DOING THE HEAVY LIFTING AS THE FED STAYS ON THE SIDELINES? ARE THE MARKET STRIVING THE CHARGE? I FEEL LIKE I'M HAVING DEJA VU FROM CONVERSATIONS IN 2022 WHERE THE MARKETS STARTED TO PRICE AND HYPES BEFORE THE FEDERAL RESERVE DID. I AM CURIOUS IF THAT IS HAPPENING IN TERMS OF THE REAL ECONOMY EFFECT YOU ARE STARTING TO SEE WITH THESE CUTS PRICED INTO THE MARKET. TOM: THERE WAS A READ ACROSS IN TERMS OF CENTRAL BANK GOVERNORS. WE HEARD FROM GOVERNOR UEDA IN JAPAN. THEY HAVE A DIFFERENT SET OF PROBLEMS. THE EXPECTATION THAT MAYBE THEY GO AGAIN WITH A HIKE IN OCTOBER. WE ALSO HEARD FROM THE ECB. CHRISTINE LAGARDE GIVING AN INTERVIEW. ON THE HAWKISH END OF THE SPECTRUM. KRITI: HE SAY THAT THE EUROPEAN CENTRAL BANK WOULD PERHAPS NEED A PERMANENT SHIFT IN ECONOMIC OUTLOOK TO LOWERING OR BORROWING COSTS AGAIN. A COMPLETE 180 FROM THE GOVERNOR. HE SPOKE TO US ON EUROZONE POLICIES AT JACKSON HOLE. TAKE A LISTEN TO WHAT HE HAD TO SAY. > > THE CHAIRMAN HAS THE CAPABILITY TO ADAPT TO DIFFERENT SITUATIONS. I THINK THE WORLD IS CHANGING. WE ARE NOT HAPPY WITH THE TRADE CONFLICT, AND EVERYTHING IS DEFINITELY NOT HELPFUL. > > POST-TRUMP, CAN YOU AND FRANCE AND THE OTHER LEADERS OF EUROPE REALLY A -- REAFFIRM THAT SPIRIT OF GROWTH YOU HAD? > > I GUESS WE ARE DOING SOMETHING IN THE MOMENT. WE ARE GOING IN THE DIRECTION YOU ALLUDED TO. WE HAVE STRUCTURAL REFORMS. WE WILL DO A LOT OF SPENDING IN NEW INVESTMENTS OVER THE NEXT YEAR. WE DO A LOT OF THINGS IN THE MOMENT. I CAN GUARANTEE YOU THERE IS A STRONG CORRELATION ON THE GERMANY SIDE. I AM CONFIDENT WE CAN ACHIEVE A LOT. > > GIVEN THE FACT YOU COULD SEE SOME MILD RECESSION IN GERMANY, ARE YOU OPEN TO CUTTING INTEREST RATES FURTHER AFTER GETTING TO 2%, WHICH IS SORT OF BALANCED? IS IT APPROPRIATE TO GET ACCOMMODATIVE? > > THIS IS TRUE, BUT MAYBE WE ALSO HAVE TO THINK ABOUT NEXT YEAR, ECONOMIC GROWTH, THERE IS A HIGH PROBABILITY THAT ECONOMIC GROWTH IS COMING BACK. WHEN IT COMES TO INTEREST RATE POLICY, I BELIEVE WE ARE IN A KIND OF EQUILIBRIUM. INTEREST RATES ARE 2%, SO THIS IS AN EQUILIBRIUM. I DON'T SEE SO MANY ARGUMENTS THAT BRINGS ME TO THE POINT THAT WE SHOULD DO MORE HERE. I BELIEVE THAT INFLATION IS NOT THE POINT ANYMORE. > > INFLATION IS NOT THE POINT ANYMORE, BUT IT IS POTENTIALLY GROWTH. BUT HERE IS THE ISSUE. IF INFLATION IS NOT THE ISSUE, AT WHAT POINT DO YOU SEE RISK OF DISINFLATION, GIVEN THE FACT THAT THE EURO HAS BEEN STRENGTHENING? THAT IS SUPPORTING DISINFLATION. YOU HAVE THE POTENTIAL FOR CHINESE GOODS TO BE COMING INTO THE EUROPEAN REGION. CHEAP CHINESE CARS, THAT IS THE CLICHE. THAT COULD LOWER PRICES. AT WHAT POINT WILL YOU BE FIGHTING DISINFLATION AGAIN? > > IT IS DEFINITELY NOT TIME FOR COMPLACENCY. TAKE FOR EXAMPLE SERVICE INFLATION IS STILL VERY HIGH. IT IS ABOUT 3%. SO WE HAVE TO HAVE THIS WAIT AND SEE ATTITUDE. THIS MEETING TO MEETING APPROACH I GUESS IS THE BEST WAY TO DO MONETARY POLICY IN THE U.S. SYSTEM. WHEN IT COMES TO OUR SEPTEMBER MEETING, WE WILL GET NEW DATA, NEW PROJECTS, THEN WE WILL SEE. AT THE MOMENT, IF I TAKE ALL THE NUMBERS I KNOW, PMI NUMBERS, NOT GIVING ME ENOUGH ARGUMENTS TO CHANGE THE PATH. > > HOW HIGH IS THE BAR? > > I THINK THE BAR IS HIGH, SO IT NEEDS A LOT TO CONVINCE ME TO CHANGE MONETARY POLICY. TOM: ECB GOVERNOR SPEAKING TO TOM KEENE AND LISA ABRAMOWICZ. JEROME POWELL SENDING THE U.S. MARKET UP BY TELEGRAPHING THE FEDERAL RESERVE COULD RESUME REDUCING INTEREST RATES AS SOON AS NEXT MONTH. > > THE STABILITY OF THE UNEMPLOYMENT RATE AND OTHER LABOR MARKET MEASURES ALLOWS US TO PROCEED CAREFULLY AS WE CONSIDER CHANGES TO OUR POLICY STANCE. NONETHELESS, WITH POLICY IN RESTRICTIVE TERRITORY, THE BASELINE OUTLOOK AND SHIFTING BALANCE OF RISKS MAY WARRANT ADJUSTING OUR POLICY STANCE. TOM: LET'S BRING IN OUR GUEST FROM THE MARKETS LIVE TEAM. DO THE MARKETS HAVE CLARITY IN TERMS OF WHERE THIS FED GOES BEYOND SEPTEMBER? > > I DO THINK POWELL -- THE ANSWER TO THE QUESTION IS YES, THE MARKETS HAVE A SENSE OF WHERE THE FED IS GOING. I THINK WHAT POWELL'S MESSAGE WAS ON FRIDAY IS THE FED IS PREPARED TO CUT RATES BECAUSE GIVEN THE JULY INFLATION PRINTS, I THINK THE FED WANTS TO PIVOT AGAIN AS IT DID IN JACKSON HOLE LAST YEAR. I THINK WHAT THAT MEANS IS TWO RATE CUTS FOR THEM A REMAINDER OF THE YEAR. BUT WHAT THE MARKETS DO NOT CARE ABOUT IS WHAT HAPPENS IN 2026, WHEN WE GET A NEW FED CHIEF AND POSSIBLY ONE WHO IS GOING TO BE A LOT MORE DOVISH. WE HEARD FROM JAMES BULLARD THEY COULD GET TO 100 BASIS POINTS. THE MARKETS ARE THINKING, WE GET TWO RATE CUTS THIS YEAR AND 80 BASIS POINTS OF RATE CUTS NEXT YEAR, AND I THINK THE MARKETS ARE CLEARLY UNDERPRICING THE RISK THAT THE FED COULD TAKE RATES A LOT LOWER THAN WHERE IT IS INDICATED BY THE NEUTRAL RATE BY THE END OF NEXT YEAR. KRITI: WHAT DOES THE PRICING AROUND DISINFLATION IN 20 ACTUALLY LOOK LIKE -- 2026 ACTUALLY LOOK LIKE? WHAT ARE THE PRICING? > > THERE IS A BIT OF MISPRICING IN THE STEEPNESS OF THE CURVE BECAUSE, AS I WAS MENTIONING THERE IS A LOT OF RISK THE FED WILL GO A LOT FASTER NEXT YEAR IN TERMS OF RATE CUTS, THAT WILL KEEP THE FRONT -- SEND THE FRONT IN RALEIGH. -- THE FRONT END RALLY. THAT CURVE HAS ROOM TO STEEPEN BECAUSE ON THE ONE HAND YOU'VE GOT THIS INFLATION THAT IS STICKY AROUND 215. IT IS GOING TO GO BACK TO 2% ANYTIME SOON. IN A WORLD WHERE INFLATION IS STICKY AND THE FED KEEPS CUTTING RATES, WHAT YOU GET IS A STEEPER YIELD CURVE. THAT IS WHAT THE MARKETS ARE MISSING AT THE MOMENT. TOM: WHAT DOES THAT STEEPER YIELD CURVE MEAN? ARE WE BACK IN AN ENVIRONMENT WHERE WE ARE SELLING THE DOLLAR? > > I THINK THE PRONOUNCED SELLING OF THE DOLLAR IS OVER. I WAS LOOKING AT MY MODEL THIS MORNING AND BASED ON REAL INTEREST RATE DIFFERENTIALS, WHAT IT SHOWS IS THE DOLLAR IS CONVERTING BACK TO WHERE IT STARTED TRADING. THE DEVIATION FROM FAIR VALUE IS NOT AS SHARP AS IT USED TO BE. I THINK THE MARKETS ARE THINKING THAT THE U.S. DOLLAR CAN STILL WEAKEN, BUT THE MARGIN OF DEVIATION FROM THE FAIR VALUE HAS NARROWED, AND THAT SHOWS THE MARKETS ARE HEDGING THE RISK OF THE WEAKER U.S. DOLLAR, THAT THEY ARE NOT THINKING THE U.S. DOLLAR IS GOING OUT OF FASHION. THAT IS THE KEY TAKEAWAY FOR THE MARKETS. KRITI: WE THANK YOU, GIVING US HIS ANALYSIS THIS MORNING ON THE BACK OF WHAT WE LEARNED IN JACKSON HOLE. WE WILL SHIFT THE FOCUS TO WHAT IS GOING ON IN EUROPE, AND MORE SPECIFICALLY IN BRUSSELS. URSULA VON DER LEYEN HAS DEFENDED THE BLOC'S TRADE DEAL WITH THE UNITED STATES, ARGUING IT BRINGS STABILITY AND AVOIDS ESCALATING TENSIONS WITH A KEY ALLY. JOINING US IS SUZANNE LYNCH. VON DER LEYEN IS FORCED TO DEFEND THIS AGREEMENT. I THOUGHT WE WERE IN THE CLEAR, THAT STABILITY WAS A GOOD THING. WALK US THROUGH THE CRITICISM SHE IS GETTING. > > THE VERY FACT SHE WAS MOVED TO PUBLISH THIS IN A GERMAN NEWSPAPER OVER THE WEEKEND IS SIGNIFICANT. GERMANY, ONE OF THE BIGGEST EXPORTERS TO THE UNITED STATES AND EUROPE, HAD A LOT OF UNEASE IN THE COUNTRY WITH THE TERMS OF THAT DEAL AND WHAT IT MEANS FOR THE CAR INDUSTRY. THE EUROPEAN UNION HAD STRUCK THIS VERBAL AGREEMENT WITH DONALD TRUMP IN SCOTLAND BACK ON JULY 27. LAST WEEK, WE SAW FINALLY A FIVE PAGE DOCUMENT, A JOINT AGREEMENT SETTING OUT ON PAPER THE TERMS OF THAT AGREEMENT. THERE IS STILL UNFINISHED BUSINESS, NOTABLY ON CARS. THAT 27.5% THAT IS BEING CHARGED, THE TARIFF ON EUROPEAN CARS, THAT IS STILL IN PLACE UNTIL THE EUROPEAN UNION INTRODUCES ITS OWN LEGISLATION TO CUT TARIFFS COMING IN FROM THE UNITED STATES. THAT HASN'T HAPPENED YET. EU OFFICIALS ARE SAYING THEY ARE CONFIDENT THAT BY THE END OF THE MONTH THEY WILL. THAT WILL BE BACKDATED TO THE FIRST OF AUGUST. IN THE MEANTIME, THOSE EUROPEAN CAR EXPORTERS ARE PAYING THE MUCH HIGHER TARIFF THAT IS COSTING HUNDREDS OF MILLIONS OF EUROS EACH DAY HERE IN EUROPE. AS WE HEARD FROM THE EUROPEAN COMMISSION PRESIDENT, SHE BELIEVES THIS WAS THE BEST DEAL THAT COULD BE DONE, AND SHE WAS SETTING IT OUT OVER THE WEEKEND. TOM: GIVEN THE CRITICISM YOU HAVE OUTLINED FROM SOME NATIONAL POLITICIANS ACROSS THE EURO ZONE TO THIS DEAL, HOW LIKELY IS IT THAT IT IS GOING TO GET PAST, RUBBERSTAMPED, OR GO THROUGH THE VOTING PROCESS WITHIN EU PARLIAMENT? IS THERE A RISK THE ACTUAL DEAL GETS DERAILED? > > YOU ARE RIGHT, IT IS VERY COMPLICATED WHEN IT COMES TO THE EUROPEAN UNION, BECAUSE IT IS A COLLECTION OF 27 COUNTRIES. TRADE IS NEGOTIATING ON BEHALF OF OTHER COUNTRIES. BUT THERE ARE SOME HURDLES. IN SAYING THAT, PEOPLE ARE VERY CONFIDENT THIS WILL GET THROUGH AND IT IS JUST A MATTER OF DODGING -- DOTTING THE I'S AND CROSSING THE T'S. THE EUROPEAN UNION DID GET SOME CONCESSION IN THAT THE TRUMP ADMINISTRATION AGREED THEY WOULD DROP THE TARIFFS AFTER THE COMMISSION PRESENTS THE LEGISLATION, NOT UNTIL EVERY OTHER STEP IS FINISHED. THAT WILL HAPPEN QUITE QUICKLY. IN SAYING THAT, I THINK THERE IS A CONCERN IN BRUSSELS AND ALL OVER THE WORLD ABOUT THE TERMS OF THESE AGREEMENTS THE UNITED STATES IS SIGNING UP FOR. FOR EXAMPLE, SOME OF THE LANGUAGE, THE EUROPEAN UNION SHOULD BE COVERED WHEN IT COMES TO PHARMA AND SEMICONDUCTORS. THEY ARE POINTING OUT THAT DONALD TRUMP HAS THREATENED PHARMA IMPORTS INTO THE UNITED STATES, BUT UNDER THIS AGREEMENT, IT IS SAYING THE EUROPEAN UNION WOULD BE PROTECTED FROM THAT AND THIS WOULD FALL UNDER THE 15% CEILING. I THINK THERE IS GOING TO BE A BIT OF UNCERTAINTY UNTIL THIS GETS THROUGH THAT SYSTEM AND THESE NEW TARIFF REGIMES ARE IN PLACE. OF COURSE, THERE ARE OTHER UNKNOWNS. STEEL AND ALUMINUM, WE STILL DON'T HAVE A DEAL ON THAT. THE EUROPEANS WOULD BE PART OF A BROADER STRATEGY ON STEEL AND ALUMINUM, LOOKING AT THE ISSUE OF OVERCAPACITY ALONG WITH THE UNITED STATES. THOSE CONVERSATIONS ARE STILL ONGOING, AS IS WINE AND SPIRITS. FRANCE AND ITALY ARE NOT HAPPY ABOUT THAT. EUROPEAN UNION SAID LAST WEEK IT WILL CONTINUE TO LOBBY FOR SOMETHING ON THAT, SO LET'S SEE IF THEY DO GET THAT OVER THE COMING WEEKS AND MONTHS. KRITI: SUZANNE, SPEAKING OF SOME OF THE PUSHBACK AND CRITICISM THAT URSULA VON DER LEYEN IS FACING, MARIO DRAGHI MAKING HIS FEELINGS QUITE CLEAR ABOUT NOT ONLY THE TRADE DEAL BUT THE EUROPEAN DEFENSE RAMP UP THAT IS LARGELY GETTING LEAKED TO THE UNITED STATES, WHICH IS SOMETHING HE WARNED ABOUT IN THE DRAGHI REPORT. JUST HOW MUCH WEIGHT DO THOSE COMMENTS HAVE? > > THE COMMENTS OF MARIO DRAGHI ARE IMPORTANT. THE FORMER ITALIAN PRIME MINISTER AND GOVERNOR OF THE EUROPEAN CENTRAL BANK. HE HAS LONG BEEN WARNING ABOUT THE FUNDAMENTAL STRUCTURAL ISSUES FACING THE EUROPEAN ECONOMY. THIS ISSUE ABOUT COMPETITIVENESS AND LACK OF FIREPOWER WHEN IT COMES TO THE EU'S INDUSTRIAL POLICY AND INNOVATION. CRUCIAL TO THIS IS A LONG-AWAITED CAPITAL MARKETS UNION, THE IDEA THAT THE EUROPEAN UNION NEEDS TO INTEGRATE MORE IN TERMS OF BANKING. THAT HAS NOT BEEN A FOCUS FOR THE EUROPEAN UNION OVER THE LAST SIX MONTHS. THIS HAS BEEN A EUROPEAN UNION IN A CRISIS MODE AS IT RESPONDS TO SOME OF THE POLICY DEVELOPMENTS COMING FROM DONALD TRUMP, NOTABLY ON TRADE, AND SECONDLY ON DEFENSE. THE EUROPEAN COMMISSION WOULD SAY, IT IS DOING A LOT MORE ON DEFENSE, 150 BILLION LOANS THAT ARE SAFE. 20 OR SO COMPANIES HAVE APPLIED TO THAT. IT IS ALREADY MAKING EFFORTS ON THOSE FRONTS. BUT ULTIMATELY, A LOT OF THOSE DECISIONS ON DEFENSE WILL COME DOWN TO INDIVIDUAL MEMBER STATES, INDIVIDUAL COUNTRIES' BUDGETS. A LOT OF THOSE BUDGETS ARE UNDER PRESSURE. THE QUESTION, HOW WILL THEY FOUND IT'S -- FINANCE THIS NEED FOR MORE SPENDING ON DEFENSE? KRITI: STUCK BETWEEN A ROCK AND A HARD PLACE. THANK YOU SO MUCH, WALKING US THROUGH THE DYNAMICS IN BRUSSELS. WE APPRECIATE YOUR TIME THIS MORNING. LET'S GET A QUICK CHECK ON TWO OF THE MAJOR STOCKS WE ARE WATCHING. I WILL START WITH ORSTED, DOWN ABOUT 16% IN TRADING. THIS COMES AFTER A POLICY DECISION, DONALD TRUMP HALTING A WEIGHTED PROJECT IN RHODE ISLAND FOR ORSTED THAT MIRRORED COMPLETION TO THE TUNE OF 80%. THIS COMES AFTER ORSTED HAS BEEN FACING QUITE A BIT OF PRESSURE. THE SELLOFF CONTINUES, DOWN BY 16% THIS MORNING. TOM: CAN I GIVE YOU AN INTERESTING FACT ABOUT JDE PEET'S? IT HISTORICALLY GOES BACK TO 1753. IT IS A GLOBAL COFFEE CHANGE OPERATED IN ABOUT 100 DIFFERENT COUNTRIES. THIS IS A TAKEOVER DEAL. IT IS DR PEPPER COMING IN WITH AN OFFER. $18 BILLION U.S., 15.7 BILLION EUROS. 381 EUROS PER SHARE. THE STOCK IS SHARING ON -- SOARING ON THE BACK OF THE NEWS. KEURIG DR PEPPER HAS BEEN STRUGGLING, BUYING JD PEP IT'S --JDE PEET'S. KRITI: COMING UP, WE WILL TALK ABOUT THE OTHER STOCK THAT MAY BE GETTING A LOT OF MOMENTUM THIS WEEK. THAT IS NVIDIA. THE EARNINGS COMING UP ON WEDNESDAY. WE WILL DIVE INTO WHAT'S NEXT, WHAT TO WATCH, AND WHAT KIND OF RIPPLE EFFECTS OF THE WORLD'S LARGEST COMPANY ACTUALLY IS. STICK WITH US. THIS IS BLOOMBERG. ♪ TOM: WELCOME BACK. DONALD TRUMP HAS SEALED A DEAL THAT HAS GIVEN THE U.S. GOVERNMENT A NEARLY 10% STAKE IN INTEL. THE MOVE COMES AS THE ADMINISTRATION SIX TO RERATE -- INVIGORATE THE COUNTRY. SPRING AND ROB LEE. TELL US ABOUT THE SHAPE OF THE STEEL. -- TELL US ABOUT THE SHAPE OF THIS DEAL. > > IN MONETARY TERMS, THE AMOUNT OF MONEY BEING INJECTED BY THE U.S. GOVERNMENT, OR IN TERMS OF EXTERNAL SHARE PURCHASES, APPROXIMATELY MATCHES WHAT WAS PROMISED BY THE BIDEN ADMINISTRATION UNDER THE CHIPS ACT. I THINK THAT IS AN INTERESTING OBSERVATION. IN THEORY, ASSUMING THIS HELPS INTEL ON ITS JOURNEY TO TURN AROUND IN THE MEDIUM-TERM, AT LEAST THE U.S. TAXPAYER STANDS TO GET SOME SORT OF FINANCIAL RETURN, ASSUMING THIS PLAN HAPPENS. WHAT IT DOES PROVE FROM AN INTEL PERSPECTIVE IS THIS IS AN ENDORSEMENT, A STRONG SIGNAL OF THE BACKING OF INTEL AND SIGNIFYING THIS COMPANY IS TOO BIG TO FAIL. FOR THOSE WITH LONG ENOUGH MEMORY, THAT IS SOMETHING WE HAVEN'T HEARD SINCE THE FINANCIAL CRISIS OF 2008. THE CEO OF THE COMPANY HAS A HUMONGOUS TASK IN TERMS OF RESTRUCTURING THE COMPANY AND PUTTING IT BACK ON THE GROWTH PATH. VERY QUICKLY QUOTING SOME NUMBERS FOR YOU, NOT EVEN LOOKING AT THIS YEAR'S FORECAST, CONSENSUS IS DOWNWARDLY REVISED. THE EARNINGS ESTIMATES, 83% SINCE THE BEGINNING OF JANUARY. THE EARNINGS OUTLOOK HAS DETERIORATED SIGNIFICANTLY YEAR TO DATE. KRITI: ROBERT LEE, WE BELIEVE THE CONVERSATION THERE. SENIOR ANALYST AT BLOOMBERG INTELLIGENCE. I WANT TO STICK WITH THE CHIPS STORY. SOUTH KOREA'S PRESIDENT IS SET TO MEET WITH THE U.S. PRESIDENT LATER TODAY AHEAD OF HIS TRIP. HE MET WITH JAPAN'S PRIME MINISTER IS A LEADERS SEEK COOPERATION WITH THE UNITED STATES. LET'S GET MORE FROM JOHN HERSKOVITZ. WALK US THROUGH WHAT TO EXPECT FROM THIS VISIT. > > IT IS HIS FIRST VISIT TO WASHINGTON TO MEET TRUMP. HE'S ONLY BEEN IN OFFICE A FEW MONTHS. WE WILL SEE THINGS INCLUDING THE TRADE TARIFFS THAT HAVE BEEN PUT ON HIS COMPANY, QUITE SIMILAR TO JAPAN. HE TALKED ABOUT THOSE TARIFFS WHEN HE VISITED JAPAN AHEAD OF THE TRIP TO THE U.S.. ALSO, WE WILL SEE THINGS LIKE NORTH KOREA AND CHINA BE PART OF THIS. NORTH KOREA ALWAYS HAS A WAY OF MAKING ITS WAY INTO THESE MEETINGS. THE U.S. TALKED ABOUT STRATEGIC FLEXIBILITY. THIS TERM REFERS TO ALLOWING THE U.S. TROOPS WHO ARE STATIONED IN SOUTH KOREA BE DEPLOYED IN CASE THERE IS A CONTINGENCY IN TAIWAN. THERE ARE OTHER THINGS GOING ON AS WELL, FROM SHIP TO AUTO MAKING. BUT IT IS HIGH-STAKES. TRUMP IS ASKING A LOT AND IT IS VERY DIFFICULT TO MANAGE WHAT TRUMP MAY BE THINKING. THE FIRST TRIP TO MEET TRUMP AND HE HAS A LOT TO BE CONCERNED ABOUT. KRITI: JOHN HERSKOVITZ GIVING US A PREVIEW OF THIS HIGH-STAKES MEETING. WE THANK YOU FOR YOUR TIME THIS MORNING. HE WAS TALKING ABOUT THE SHIPPING INDUSTRY, THE DEFENSE INDUSTRY CREATING A UNIFIED FRONT AS THESE TRADE NEGOTIATIONS ARE ONGOING AS WELL. ONE PIECE HE DID NOT MENTION WAS THE CHIP SECTOR. WE KNOW THAT INTEL AND NVIDIA ARE DEALING WITH THESE GEOPOLITICS AS WELL. I WONDER HOW MUCH OF THAT GETS FEEDBACK, COMMENTARY. TOM: AND TO WHAT EXTENT? IF YOU ARE AN EXECUTIVE OF SAMSUNG AND A RECIPIENT OF SOME OF THE CHIPS ACTS, WHETHER YOU ARE THINKING ABOUT A TRUMP ADMINISTRATION THAT HAS TAKEN A 10% STAKE IN INTEL AND WHAT THAT MEANS FOR YOUR STAKES. CHINA AND INDIA TRYING TO REPAIR THEIR RELATIONSHIP. THAT IS A CLEAR TAKE AWAY FROM A TRUMP ADMINISTRATION THAT HAS UPENDED SOME OF THE GEOPOLITICAL DOUBT WE HAVE BEEN SO USED TO. KRITI: YOU HAVE TO OVERLAY IT WITH THE GEOPOLITICS. WHEN YOU LOOK AT THESE MARKETS, IT IS A RISK OFF DAY. LIQUIDITY PERMEATING THROUGH TODAY'S SESSION. WE WILL SEE IF IT PICKS UP LATER IN THE WEEK WITH NVIDIA EARNINGS AND DATA THROUGH THE WEEK. STICK WITH US. THE PULSE IS NEXT. THIS IS BLOOMBERG. ♪

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Powell's Dovish Pivot at Jackson Hole, Nvidia Earnings This Week | The Opening Trade 8/25/2025

The Opening Trade has everything you need to know as markets open across Europe. With analysis you won't find anywhere else, we break down the biggest stories of the day and speak to top guests who have skin in the game. Hosted by Anna Edwards, Guy Johnson and Kriti Gupta. (Source: Bloomberg)

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